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Contingent Worker

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Definition of Contingent Workers “Contingent workers are those who do not have an implicit or explicit contract for ongoing employment. Persons who do not expect to continue in their jobs for personal reasons such as retirement or returning to school are not considered contingent workers, provided that they would have the option of continuing in the job were it not for these reasons” (The U.S. Bureau of Labor Statistics). Contingent worker are legally employees, but are not regular full-time employee of companies. They are also known as freelancers, independent professionals, temporary contract workers, independent contractors or consultants. Contingent workers are typically paid with no regard for wage standards and without benefits. There is a discussion about how the term contingent workers should be defined. The contingent workforce consists of many categories of workers, it may include those who are temporary workers and independent contractors, who are hired through staffing firms, or whose jobs are structured to last only for a limited time or until a completion of a project.
Descriptions of common contingent workers categories by The U.S. Bureau of Labor Statistic (BLS)
-Temporary employees or TEMPS generally work for temporary employment agencies or temporary staffing firms that place workers in companies for short-term assignments. They typically earn less than full-time employees and are less likely to receive benefits.
-Contract Workers generally are self-employed and negotiate an agreement directly with an employer or a contract company for a particular project or a specific time period.
-Part-Time Employees work fewer than 35 hours a week. They receive fewer paid or no benefits from their company. Part-time employees may be scheduled to work in particular peak needs.
-On-Call Workers are called into work only when needed. They are not able to predict the periods when they have to work, for example, a substitute teacher.
-College Interns are student who work for a company to gain some work experience. They may work full-time or part-time, but they are likely to work only for a short period of time. Interns is considered as contingents workers because they provides staffing flexibility for a company. “Workers who lack job security and have unpredictable work schedules, such as temporary and on-call workers, should be included in the definition of the contingent workforce. However, there is an argument whether workers such as independent contractors, self-employed workers, and part-time wage and salary workers should be included” a general agreement of labor experts and other, (U.S. Government Accountability office). It is difficult to estimate the size and the growth of the contingent workforce because there is no consensus on which categories of workers should be included. However, U.S. Government Accountability Office has estimated the size of contingent work force which comprised 5%-30% or nearly one third of the total U.S. labor force.
The Proportion of Contingent Workers in February 2005
Independent contractors 10.3 million (7.4 percent of total employment)
On-call Workers 2.5 million (1.8 percent of total employment)
Temporary Workers 1.2 million (0.9 percent of total employment)
Workers provided by contract firm 813,000 (0.6 percent of total employment)

The use of the contingent workforce has risen dramatically since the fallout downsizing during the 1980s until the present, when the world economy has rapid changes. Employers look to various strategies and utilize contingent workers, both low-paid workers and highly-paid workers.
Low-Paid and High-paid Contingent workers Low-paid service sector workers are usually low-skilled workers who have low family income. They are provided with fewer paid and not offered benefits by their employers or do not qualify for benefits. That is because they lack of numbers of hours of employment necessary to qualify and frequently made use of seasonally and temporary labor. Low-paid workers are more likely in industries on the border, particularly agriculture, retail and personal services. They lack of number of hours of employment necessary to qualify. Highly-paid workers are highly-skilled workers, such as, professional, technical, and managerial workers, who work as independent contractors or self-employees. High-paid workers are often satisfied with their work arrangements. However, they are less likely than the rest of the workforce to receive health insurance and pension benefit through their employers. Undoubtedly, many contingent workers do not participate in health insurance and pension plans which offer by their employers because of the cost of the plans. However, contingent workers who are employee are covered by key laws designed to protect worker.
The Role of Contingent Workers in the New Economy The contingent workforce style of labor is becoming much more popular in the American economy today because of several different contributing factors. Contingent workers play significant roles in the new economy which is turning to the new type of employment and different from the old. Contingent workforce allows employers to adjust employment levels and costs, depending on what kind of expertise and labor. Employers control over their labor costs by seeking to quickly adjust the size of their workforce in response to changing market conditions which is related to firm performance. Employers rely more on contingent workforce, which causes a strong demand of contingent labors and highly knowledgeable and flexible employee, and decreases the fixed labor costs. Those are the key factors that make contingent workforce becomes more attractive, thousands of available jobs offer daily to the unemployed both work independently of one organization or work short term for multiple companies.
Utilization of Contingents Workers The American Management Association (AMA) stated that the use of contingent workers is related to firm performance, the greater utilization of contingent workers, the better of firm performance. The significant advantages of using contingent workers are staffing flexibility and cost reduction.
Staffing flexibility: Contingent workforce allows the company to hire employees who have skills that may not present in their core workforce. This is likely to occur with contract or subcontract employees, who may be hired for a short-term project and for which the company has no current staff. Moreover, Contingent workers are used by employers for scheduling flexibility and to support overloads.
Cost Reduction: Contingent workers often are less expensive in term of salary and benefit than core workers. It allows employers to reduce labor costs through lower hourly wages, prevent expensive hires and avoid benefit payments.

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